Freedom of speech, hate speech and the Internet - the role for community response?

While attending the Internet Governance Forum (IGF) recently, I
went to an interesting session about the issue of hate speech in
the context of the Internet. While some of the panelists argued
that there need to be boundaries and actions taken when acts of
hate speech are committed, others argued that we need to be
careful when advocating for control over what people say on the
Internet, lest 'hate speech' be used as an argument to suppress
freedom of expression more generally. Freedom of expression is a
human right, however so is the right to dignity and this is where
a balance needs to be established.

This is not a new issue - it has existed in the context of
traditional media too - but the Internet, and especially social
media, has made it a little more complicated. The Internet
extends way beyond national boundaries and country-specific
legislation, and the potential audience for any one message is
much greater.

When it came to talking about solutions during the session some
people were really behind the idea of community response and
moderation. What this means is that other members of the
so-called community - other Facebook or Twitter users for example
- take action against someone spreading hateful racists, sexists
or xenophobic messages online. The user can either be reported,
blocked or have their comments demoted. Sometimes other users
will send him or her messages to show their disapproval.

On one hand this sounds easy and cost effective. However it is
not always so simple: sometimes the wider community is too broad
or uninterested and no action takes place; sometimes members of
the community overreact and engage in hate speech themselves;
some users may be protected by anonymity; and sometimes there are
serious offline consequences to hate speech online and greater
action is needed. Where I come from - South Africa - there have
been a few cases where people who posted racist tweets were not
only reprimanded by the Twitter community in the country but were
also reported to the Human Rights Commission.

I would like to hear your thoughts on this - have you ever
reported a user you felt was abusing someone else's right to
dignity? How do you feel about community moderation and do you have
any other suggestions?